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“Mortgages 101” author David Reed on the steps to refinance your home even if it’s worth less than you owe.
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More than a quarter of all home mortgages in the US are currently under water.
And if you online you probably think your chances of refinancing your next to none but my next guest says there are ways to take advantage.
At today's low interest rates even if you will more than your home is worth.
Joining us now read the author of mortgage is 101 David what about the show great to see you.
Thanks for the invitation to get injured are we here married so we did spend a lot of time talking about a program called harp that the federal government hats which is to do -- this help people who were underwater it's had kind of a mixed result.
But you say as I understand it -- even do this even without the federal government how do you get start.
Well you if you're there's there's certain qualifications on those loans and you -- -- quite a bit of an earlier these special programs have been out there.
The problem is -- what's called bank over ladies and in individual bank and say hey there might be a program after for us back.
We're simply not going to participate.
And that's where we're running into these situations right now.
You still have to have some equity in -- -- financing a property with a conventional program.
But if it's out there take advantage of -- the first place I do start with you bank.
Start with the bank you already have and ask questions are it.
-- before true financing you've got to have all your documents in order we need.
Well you -- probably more than you saying -- -- into the loan regulations have have there been piled off -- the past two or three years more and more of them we haven't just gone back twenty years.
With regard to documentation requirements.
It's gotten even more onerous than that everybody now has to have tax returns and it all has to match.
Previously -- have to be self employed borrowers or or people that own their own businesses in parts of corporations that had attorney and tax returns now it's everybody.
So make sure you have two months worth of paycheck stubs make sure you have all pages of three months what's your view banking investment statements.
Make sure your tax returns -- would you loan application -- a lot of people out there that have with the regular job in WT salaries get a paycheck on the fifteenth and the thirtieth.
But what they don't disclose on their application is they got a side business and maybe it's a pet sitting business and they lost 5000 dollars last year.
When your tax returns come in and you show 5000 dollars on your loss there deduct that from -- qualifying income was potentially could no longer qualify for the refinance.
Make sure you documentation you have -- at what will with the tax return and match yeah.
Are -- so obviously also want to check the that your application is accurate.
I mean you mentioned appraisals savvy and we've had the appraisal world has been very confusing they on the way up they over praise towns that they were worth too much now they're doing just the opposite -- -- -- -- Mattson Mattson.
That's a big mess because those guidelines have changed as well -- past couple of years.
And this in an attempt to provide some privacy -- some transparency between a lender in the appraisal to make sure that they weren't too.
Cozy with one another they put a wall in between the appraiser and the lender so they don't talk to one another anymore.
What happens now with this program there isn't an independent.
A company an organization or is the appraisal for you.
And typically what happens is they can assign appraiser to come out to in praise your home for your refinance.
And it may not be familiar at all with your neighborhood and typically you're gonna find that that's the issue they may be -- trained.
May not have very much experience and oftentimes is an appraiser comes back was simply the lowest -- -- -- -- property and and that's a fact.
So when you have appraisal savvy in your business is going to be your job when you -- contact you to come a look at your property.
That you informed that appraiser him or her say it will you know what.
I know live in this older neighborhood but -- completely remodel my kitchen I got a brand new bath.
Which tell him -- all the things you've done to your home that's gonna bring up the value because what they do before they were coming out.
As of the county records to see what the county says your house is worth.
And they'll as -- -- now and I want to Johnny doesn't have any idea you also say be patient and of course proactive and I.
And of course by that you at you you have to help guide this whole thing because.
At the end of the day these banks they are being inundated inundated.
With refi application.
Well when there inundated with -- refinance applications you can also know that they're inundated with short sell requests.
They're inundated loan modification requests.
There inundated with -- purchase money low for people that are buy new homes.
And they're understaffed -- when you have patients understand that that's what's going on here is our us with the triplets are very full -- but like -- active.
Are rightly you -- and the and -- -- and pick that up upbeat that the finally what you have to do.
Is make sure your proactive don't sit back and wait for your -- -- to contact you contact your loan officer twice a week.
Check up what's going on if they have questions answered them immediately and get your documentation and at the back -- as soon as you possibly can't.
You've been facilitator here you'd be proactive in this situation and you get it's gonna be a lot easier for -- Well -- thanks for your help today we really appreciate it.
Any time.
